draft sales and use tax nexus model act open for public comment

The hearing is to be held on September 15, 2015. Written comments are due no later than September 11, 2015. Persons making oral presentations are requested to file written comments as well. 

The following is an excerpt of the Summary of the Important Provisions of the Model as published by the Multistate Tax Commission (MTC) Uniformity Committee:

While the model is called the “nexus” model, states generally do not define nexus as part of their sales and use tax statutes. Rather, almost all states impose tax payment or collection obligations on defined persons who engage in defined activities in the state (e.g., “retailers” or “vendors”, and “doing business” or “engaging in business”). Many statutes do this within a “general definitions” section for the particular act or article, while others do so in the imposition statute itself.

Most states explicitly or implicitly extend their statutory use tax collection obligations to the limits of what the Constitution allows. The draft model follows this general approach of defining the operative terms for imposing a collection duty. The draft consists of two main provisions – a definition and a presumption – in Sections (a) and (b) respectively.

Section (a) defines the person on whom a tax payment or collection burden is imposed (here, “retailer engaged in business”) as a retailer, whether or not authorized to do business in this state, that has a sufficient connection with this state under the United States Constitution to be subject to sales and use tax collection duties . . . .

Section (a) also contains a list of activities that would bring a person within the definition of “retailer engaged in business.”

Section (b) is the “click-through” nexus provision modeled on what other states have enacted, generally—which takes the form of a rebuttable presumption. This provision also contains a minimum threshold.

Other provisions of the bill define certain terms and also provide for the possibility that federal legislation might someday grant states authority over other out-of-state persons (i.e. remote sellers).

The workgroup discussed but decided not to include any explicit de minimis rule for the activities listed in Section (a) or any “trailing” nexus provision.

For more info, please see the MTC's Notice of Public Hearing and site.